Margin Call
A margin call is a demand or warning that additional collateral is needed because account equity has fallen below a required level.
✦ Key Insight
It signals that leverage and losses have reduced the account's safety buffer.
✕ Common Misconceptions
Do not assume every crypto exchange provides time to respond before liquidation.
Detailed Explanation
In Practice
Dig Deeper
Margin
Margin is the collateral a trader provides to open and maintain a leveraged trading position. It is not the same as the total value of the position.
Liquidation
Liquidation occurs when a leveraged trading platform forcibly reduces or closes a position because the trader no longer has enough margin to satisfy the required maintenance margin.
Collateral
Collateral is an asset pledged to support a loan, derivatives position, stablecoin, or another financial obligation. If the required collateral value falls too far, it may be sold or liquidated according to the system's rules.
Leverage
Leverage allows a trader to control a position larger than the capital committed to support it.
Maintenance Margin
Maintenance margin is the minimum collateral or account equity a leveraged position must maintain to remain open under a venue's rules.